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Nelson Company manufactures product Z97, which incurs costs of $175 for direct materials and $140 for direct labour per unit. The company estimated its production

  1. Nelson Company manufactures product Z97, which incurs costs of $175 for direct materials and $140 for direct labour per unit. The company estimated its production overhead and direct labour hours for the month as follows:

Department A

Department B

Department C

Overhead costs

$95,000

$127,000

$83,000

Direct labour hours

4,500

12,000

5,500

Each unit of product Z97 is produced using:

  • 15 labour hours in department A
  • 10 labour hours in department B, and
  • 9 labour hours in department C

Calculate the cost of one unit of product Z97 using a company-wide overhead rate assuming the allocation base is direct labour hours. SHOW YOUR WORK & CALCULATION

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